G10 central banks face renewed rate-hike risks as inflation persists

  • Major G10 central banks face renewed pressure to raise interest rates.
  • Australia’s policy rate reached 4.35% after three hikes this year.
  • The ECB raised rates by 25 basis points on Thursday, while U.S. and Japanese meetings are next week.

Persistent inflation and resilient economic growth are raising the prospect of further interest-rate increases across the Group of 10 developed economies. Energy prices and continuing Middle East tensions are adding to the pressure. The European Central Bank raised rates by 25 basis points on Thursday, while the Federal Reserve and Bank of Japan are due to meet next week. Australia has lifted rates three times this year to 4.35%, and Norway, Britain, the United States, New Zealand, the euro zone and Canada also face varying degrees of further-tightening risk. Sweden is expected to remain more dovish, Japan is anticipated to raise rates to 1.25%, and Switzerland is expected to hold its rate at 0% despite stronger prices and growth.

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